Disposition of Distressed, Vacant and Abandoned Property in Local Communities Phil Bracken, EVP Wells Fargo Home Mortgage U.S. Conference of Mayors Annual Meeting June 11, 2010

1 The Impact of the Crisis on U.S. Wealth Total household assets declined by $13 billion and real estate assets by $7 billion from their respective peaks (2007 and 2006) to troughs (both in Q109). Some rebound occurred in Source: Federal Reserve Board

2 The Three Housing Challenges 1.Stopping the Flow of Foreclosures and Short Sales (Keeping people in their homes) 2.Cleaning up (disposing) of the existing inventory 3.Preventing the Crisis from re-occurring

3 1. Stop the Flow (Keep people in their homes)  Make good loans  Work early and often with customers on options to help make their mortgage payment sustainable.  Use case-by-case and streamlined methods that take into account customers’ circumstances.  Align our loss mitigation efforts with investor guidelines and servicing policies.  Before a house is moved to foreclosure sale, conduct a final loan review to ensure all workout options have been exhausted. Wells Fargo’s foreclosure rate of 1.95 percent continues to be considerably less than the industry’s average of 3.18 percent. * *Source: Inside Mortgage Finance, May 21, 2010

4 In 2009 and through April 2010, Wells Fargo has helped two million households with mortgage payment relief. 1. Stop the Flow (keep people in their homes)  Continue to make every effort to keep people in their homes through the federal Home Affordable Modification Program (HAMP) and other modification programs focused on mortgage payment relief.  In 2009 and through April 2010:  111,416 active trial and completed HAMP modifications, including 36,094 permanent modifications  390,000 non-HAMP active trial and completed modifications  Refinanced more than 1.5 million loans

5 1. Stop the Flow (keep people in their homes) The Wells Fargo Home Preservation Workshops  Nine Cities thus far—Atlanta; Baltimore; Chicago; Phoenix; St. Paul, Minn.; Los Angeles; Oakland, Calif.; Miami; and Minneapolis  More than 12,000 customers face-to-face  Many customers who attended have received some kind of workout option on site or shortly after the events.  Credit counseling on site  Fannie Mae/Freddie Mac/FHA solution “decision makers” on site  Additional cities planned—Cleveland, Las Vegas and Memphis

6 2. Cleaning Up (Dispose of the Inventory)  Fully underwritten - FHA fixed-rate 30-year mortgage loans  Available anywhere in America  Improvement (repair costs) built into the 30 year mortgage  3.5% downpayment requirement for owner occupants  Streamlined 203(k) ($35,000 of repair and under)  Regular 203(k) (more than $35,000 of repair)  Loan amount based on “as repaired” condition  Repair amounts put in escrow and disbursed as work completed  HUD approved contractor required  The LOANS ARE ASSUMABLE!!!  See next two pages The FHA 203(k) mortgage – (America’s Jobs Program?)

7 2. Clean Up (Using the FHA 203(k) program)

8 2. Clean Up – A Wells Fargo Exclusive - Remodel Express SM [203(k) In A Box]  Remodel Express provides the security of working with some of the most successful professional companies in America a renovation solution to purchase or refinance and remodel a home. [203(k) In A Box]  Home Depot  Lowes  Sears  Program features:  The maximum repair cost is $35,000  Faster processing and underwriting times, and lower fees  One-year workmanship warranty on all work performed by national home improvement company  Loan amount may be up to 110% of ‘after improved’ value  Wide range of allowable repairs/improvements, such as:  Energy efficiency—Appliances, insulation, windows, HVAC  Major/minor remodeling—Kitchens, baths, room additions  Basics—Roof, plumbing, electrical, foundation repairs septic and well systems, painting, floors

9 2. Clean Up – (Needed Enhancements to the FHA 203(k) Program)  Ideas for expanding availability to non-owner occupied properties  Expanded to investors to purchase and rehabilitate properties  Fixed-rate mortgage at affordable rates  Fully assumable  Investors would have to sell to owner occupants or lose affordable features  City outreach to raise awareness among residents  Owner occupant auction process  Leverage diverse segments networks  Cities actually obtaining a 203(k) mortgage themselves

10 3. Preventing the Crisis from Re-Occurring (Wells Fargo’s responsible mortgage lending and servicing principles) Highlights of our long-standing principles:  Facilitate informed customer choices.  Approve applications for loans only if we believe the borrower has the ability to repay the loan according to its terms.  Offer prime-pricing options to first mortgage loan consumers whose loans qualify for such pricing. (Prime Loan Filter)  Approach every interaction from the customer’s point of view.  Provide clear and timely information to consumers, understanding how complex homeownership and financing can be. (Transparency)  Provide tools, products, services and information that can help our customers manage their credit.  Do all we can to help keep people in their homes whenever possible.

11 The 203 (k) Solution -- ( America’s Jobs Program?)  Get rid of inventory  Stabilize House Prices?  Create Jobs?  Create Rental Housing?  Create Lease Purchase Options?  Create Assumable Fixed Rate Loans  Improve Tax Revenue for Cities?  No Budget Impact to Taxpayers  Questions?